Without a doubt, the month – and quarter – ended on a high note attempting to remain positive despite the conflicting data and narratives. One example being the employment numbers. Yes, improvement was evident. I use was as it is past tense, implying the data doesn’t reflect current reality which is the reopening is regressing in many states including Texas and California. My concern is the market is getting ahead of itself – particularly with earnings season forthcoming and visibility lacking.
On the personal side, I was able to use the volatility advantageously to essentially complete the migration and realignment, triggered by Motif’s closure. With one transaction remaining, July will see the return of my monthly scorecard. Frankly, there were too many transactions for the data to be meaningful. The main points being:
My exit from ETFs
My exit from Airlines – Southwest (LUV) as their dividend suspension will last at least a year and possibly two if they accept additional government money. I still retain an indirect ownership in Cathay Pacific through Swire Pacific (SWRAY).
Reducing my Insurance Company exposure – when complete, three US and three Canadian insurers will remain in the portfolio.
A little color is in order on insurers. Law firms have begun to solicit clients whose business interruption claims were denied. While I’ve never owned Aflac (AFL), I sure don’t want to buy now as their claims sweet spot (leading supplemental insurer by paying cash fast when policyholders get sick or injured) would appear to be in Covid’s cross hairs. While I dislike Primerica’s (PRI) distribution model, they may be winners if their clients holders let policies lapse due to unemployment (term life focus). That one I’m holding my nose and keeping.
With this backdrop, the S&P index increased 1.81% in June and my portfolio value increased 3.33%. This now excludes my cash position as it has dropped below 3%. For the year I’m beating the index by 4.77%.
A byproduct of the portfolio gyrations (roughly 10% drop in holdings) is I’m now more out of balance in my allocation and distributions. My priority for the remainder of the year will be getting it back in sync.
June delivered an increase of 26.42% Y/Y with most of the increase attributable to double payments due to the migration from Motif and the sizable purchase of BLK before ex-div. I expect this level of increase to begin tapering.
Dividend increases averaged 5.6% with 40.68% of the portfolio delivering at least one increase (including 6 cuts and 9 suspensions). This is off last years’ pace and a direct by-product of the global pandemic.
2020 Dividends received were 60.72% of 2019 total dividends. The YTD run rate was not calculated due to portfolio churn. I suspect it’s near my 110% target.
Generally I don’t use Yield on Cost for much – but the portfolio YoC has dropped 3 basis points with the churn. This could be a leading indicator of second half dividend receipts. If so, front loading the year may have been a solid decision. I’m also expecting another cut – Wells Fargo (WFC).
Splits and Stock Dividends
With the health of you and your loved ones paramount – stay safe while enjoying the holiday.